WA Gold Ltd (ASX:WAU) has outlined a potential low-capital pathway to gold production at its 100%-owned Abercromby Gold Project in Western Australia, with a new scoping study pointing to strong cashflows from an initial open-pit development and toll treatment strategy.
The study, focused on a Stage 1 mine plan, estimates pre-production capital of about A$8 million and forecast pre-tax net cashflow of A$243 million to A$297 million. Pre-tax NPV7 is estimated at A$205 million to A$253 million.
WA Gold said the study supports an initial production target of about 114,000 ounces of gold, with about 90% of that inventory drawn from Indicated Resources under the JORC Code.
The company said the scoping study was based on a gold price of A$6,000 per ounce, below the current spot price of about A$6,700 per ounce, highlighting additional leverage to stronger bullion prices.
“These scoping results highlight the value and viability of Abercromby as a new mine. Our approach to include largely indicated resources in the scoping work has delivered a very rigorous result and, together with buoyant gold prices, confirms a compelling opportunity," WA Gold’s CEO Ben Pollard said.
“We considered a range of mining scenarios at Abercromby with the preferred option being a staged development that initially focuses on mining high-confidence resources – the Stage 1 Mine.
“WA Gold will continue to expedite resource development drilling whilst advancing PFS work with our beefed-up technical and management team. We look forward to updating investors as key project milestones are achieved.”
Low upfront capital, strong returns
A key outcome from the study is the relatively modest upfront capital requirement compared to the forecast returns.
WA Gold said the Stage 1 development could generate up to a 33 times return on initial capital, with an internal rate of return of as much as 526%.
The company is assessing an open-pit mining and toll treatment model, which avoids the need for major expenditure on building a standalone processing plant and offers a faster route to potential production.
Established infrastructure supports development case
The Abercromby project is in the north-eastern goldfields of Western Australia and sits on a granted mining lease, which WA Gold said supports a more streamlined development pathway.
The company also pointed to nearby operating processing facilities within trucking distance of the project. WA Gold has executed a memorandum of understanding with Wiluna Mining to assess a potential ore processing arrangement at the Matilda carbon-in-leach plant.
Metallurgical studies have confirmed free-milling gold across all zones of the Abercromby orebody, with testwork delivering recoveries of 93% to 95% using conventional carbon-in-leach processing. WA Gold said this supports the technical viability of a toll treatment strategy.
Resource base offers development and growth upside
Abercromby currently hosts a 518,000-ounce gold mineral resource estimate, with mineralisation starting near surface and remaining open at depth.
WA Gold said this gives the project both near-term development potential and longer-term upside, with higher-grade zones already identified within the broader resource.
The scoping study recognises scope to expand mining operations over time and recover additional portions of the existing resource. It also sees further upside through drilling of extension targets across the project area.
Expansion drilling is continuing in parallel with development studies as WA Gold looks to grow the resource base and convert more of the current inventory into future mine stock.
Production target marks first development step
WA Gold said the Stage 1 production target represents an initial step in unlocking value at Abercromby rather than the full scale of the opportunity.
With low startup capital, established regional infrastructure and resource growth still in play, the company believes the project offers both a development opportunity and longer-term growth optionality in a strong gold price environment.